"The Bank of England has warned there is a growing risk of a sudden correction in global markets as it raised concerns about soaring valuations of leading AI tech companies. Policymakers said there were also threats of a sharp repricing of US dollar assets if the Federal Reserve lost credibility in the eyes of global investors. It comes as Donald Trump's continues to attack the US central bank and threaten its independence."
"Faith in the AI boom has recently been rattled by research from the Massachusetts Institute of Technology, which showed that 95% of organisations are getting zero return from their investments in generative AI. That has fed into concerns that stock market valuations could tumble if investors ended up being disappointed by the progress or adoption of AI technology. The FPC said this could drive a re-evaluation of currently high expected future earnings."
Bank of England policymakers flagged a growing risk of a sudden global market correction driven by soaring valuations in leading AI-focused technology companies. Rapid valuation increases include OpenAI rising to $500bn from $157bn and Anthropic almost tripling to $170bn. The financial policy committee said equity market valuations appear stretched and investors have not fully priced potential risks, leaving markets exposed if AI expectations prove overly optimistic. MIT research finding 95% of organisations get zero return from generative AI heightened concerns that disappointment could prompt re-evaluations, reduced finance for households and businesses, and material spillovers to the UK financial system.
Read at www.theguardian.com
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